Over the last years, many successful web 2.0 services have been launched, well received by the end users but many times struggling to reach break even and profit. Some made impressive exits based on future revenue potential and good timing.
The business is often based on an advertising model and follows a standard Internet approach. First launch a very compelling free service with potential to spread virally, with the primary target to attract many users and gain significant penetration.
In a second step, capitalise on the digital real estate by offering advertising space, premium services and sponsored links. Several have succeeded in getting the service and distribution right, but a quite limited number have made real money as the costs quite often by far exceed the limited revenues per user. You can always hope for an exit, but eventually someone needs to make a profitable business out of the service.
In addition, operators are concerned by the increased IP traffic advocating more traditional telecom business models, reflected in the debate about net neutrality.
The rights issues are not obvious as technology is at least one step ahead of the legislation. The financial ecosystem surrounding these new services has not stabilised and matured fast enough to judge the sustainability of the models…
Read more at Universal Mobile Interface